USD/CHF struggles near three-week lows, below 0.8900 mark

The offered tone surrounding the USD dragged the USD/CHF pair to near three-week lows, around the 0.8880 region during the first half of the European session.

The pair added to the previous day's modest losses and remained depressed for the second consecutive session on Tuesday. The downtick was exclusively sponsored by sustained US dollar selling bias, though the upbeat market mood undermined demand for the safe-haven Swiss franc and might help limit the downside for the USD/CHF pair.

The USD languished near three-week lows and failed to gain any respite from the continuous surge in the US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond jumped to the highest level since February amid the prospects for the passage of President Joe Biden's proposed $1.9 trillion stimulus package.

Meanwhile, expectations for a massive US fiscal spending plan, along with the progress in vaccinations for the highly contagious coronavirus disease have been fueling optimism about the outlook of the global economy. This, in turn, further boosted investors' confidence and remained supportive of the risk-on rally in the equity markets.

This seemed to be the only factor that held bearish traders from placing aggressive bets and could extend some support to the USD/CHF pair. That said, bearish acceptance below horizontal support near the 0.8900 mark might have already set the stage for further downfall amid absent relevant market-moving economic releases from the US.

Technical levels to watch